Here is why Dixon shares rallied while Amber crashed after Q4 earnings

The early cues from electronic manufacturing services (EMS) quarterly and fiscal year earnings have been disappointing. The topline growth for these companies witnessed mixed growth, and structural headwinds pressured margins. However, the post earnings reaction for both the companies showed contrasting behaviour as investors remained optimistic after Dixon's Q4 profit plunge and became pessimistic about Amber after its strong growth in the quarter. Here is how the EMS companies fared in overall quarterly earnings report.

Single-digit topline growth

In terms of topline growth, Amber Enterprises outperformed Dixon Technologies as the company’s revenue growth stood at 10% YoY, as compared to 2% for Dixon for the same period. The Amber’s outperformance was primarily driven by growth in the high-margin electronics division as other segments witnessed moderate growth. Similarly, Dixon’s topline was primarily driven by weak smartphone demand, which was weighed down by higher semiconductor and memory chip prices. Samsung, which makes the majority of the memory cards and chips for smartphones, shifted its capacity to address the exponential demand for high-bandwidth memory chips used in semiconductor GPUs. The shift resulted in a supply crunch in the memory card markets for PCs and smartphones.

Margins under pressure

The quarter’s margin growth was clouded by commodity inflation and currency depreciation. However, Amber Enterprises continued to outperform Dixon Technologies in terms of operational efficiency owing to growth in the high-margin electronics division. The company’s electronics division posted 21% YoY growth in revenue and 119% YoY jump in operating EBITDA. For FY26, the electronics division posted revenue growth of 49% YoY and 89% jump in operating EBITDA. On the other hand, Dixon Technologies witnessed compression in operating margins due to higher input costs, particularly for memory chips. The company’s EMS division's unit economics are more complicated owing to higher input costs and external factors tied to it. Hence, any headwinds on supply chain issues, currency risk add pressures on operating margins for the company.

Profitability and guidance

The profitability of growth for Amber Enterprises looked superior at 27% YoY to ₹162 crore as compared to ₹128 crore. While Dixon Technologies’ Q4 net profit plunged 36% YoY to ₹298 crore due to exceptional gains in the previous year’s same quarter. However, both companies posted significant guidance in the guidance for FY27. Dixon Technologies guided ₹56,000 crore without the Vivo JV, which is 15-17% higher than the FY26. The company also expects margin pressures to ease in FY27 and would be more visible from FY28.

Cash is king: The litmus test

At the primary level, Amber Enterprises’s earnings growth looks superior to that of Dixon. However, the investor reaction showed a starkly contrasting response to both the results. Amber Enterprises' shares plunged nearly 17% post the result with 36% jump in profitability, and Dixon Technologies’ shares rose over 10% despite flattish topline growth and subdued profitability.

The difference in response can be attributed to investor's assesment of cash flow management for FY26. Tough Amber Enterprises posted robust growth in earnings, it was masked by underlying cash flow stress. Despite reporting strong profit growth, the net cash from operations for the FY26 plunged into negative territory at ₹12.8 crore as inventories and receivables increased, which is a red flag as it hinders future growth and leads to excessive working capital borrowing to fund the regular operations.

Whereas, Dixon Technologies posted disciplined cash flow management that delivered higher operating cash flow for the FY26 at ₹1782 crore vs ₹1149 crore in the corresponding year. Amber Enterprises’s cash and cash equivalents for FY26 stood at ₹76 crore as compared to ₹169 crore, which was also aided by increased financing. On the other hand, Dixon Technologies' cash and cash equivalents more than doubled to ₹767 crore as compared to ₹230 crore in the same period last year.

Alan Miltz, a global financial thought leader and co-author of the book Scaling Up, said, “Revenue is vanity, profit is sanity, and cash is reality”. The above example of Amber vs Dixon highlights the very principle that cash generated in the business remains a superior king and gets due recognition from investors.